The housing market showed signs of finally breaking out of its winter doldrums in May, as pending home sales showed healthy gains across the nation.
Pending sales posted their biggest monthly gain in four years, according to new figures from the National Association of Realtors, increasing by a seasonally adjusted 6.1 percent over April's rate. May's figures also put an end to a run of relatively flat pending sales dating back to December.
An increase in the number of homes available for sale, along with a drop in mortgage rates, are partially credited for the increase.
Still trail 2013 levels
Despite the increase, May's pending sales figures lagged behind those of one year earlier, coming in 5.2 percent below the May 2013 level. Weak sales throughout last winter are expected to mean that 2014 will not match last year's total, despite what is expected to be a strengthening market in the second half of the year, according to NAR Chief Economist Lawrence Yun.
"Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation," Yun said. "However, second-half sales growth won't be enough to compensate for the sluggish first quarter and will likely fall below last year's total."
Rising rents could motivate buyers
He said access to credit and student loan debt remain an obstacle for many potential first-time homebuyers, but that rising rents over the next two years due to tightening availability may push more first-time buyers into the market.
Yun projects 2014 existing-home sales will total just under 5 million units, compared to 5.13 million in 2013.
Pending home sales showed their biggest increase in the Northeastern region of the country, increasing a seasonally adjusted 8.8 percent over April, and were weakest in the South, with a 4.4 percent gain. The West showed a 7.6 percent monthly gain and the Midwest was up 6.3 percent.
Three of the four regions showed annual declines compared to May 2013, with only the Northeast showing a 0.2 percent increase. The West showed the biggest annual decline, down 11.1 percent from 12 months ago, while the Midwest and South showed annual declines of 6.6 percent and 2.9 percent, respectively.